If you are new to this series, please read through the steps we've already covered, starting with 30 Steps to Great Finances: Steps 1 through 3, before reading this post.
If you have been taking action since the beginning of this series, your finances are probably in much better shape now than they were earlier.
The last three steps focus on some final ways to improve your finances. Take these steps, and you will be able to keep all of the good habits you have developed.
Let's get started.
Step 28: Automate Your Finances
You may think to get ahead financially, you must continuously make smart money decisions. Of course making smart money decisions is necessary. But you don't have to make great moves continually; many times you just need to make them once. One way you can take some of the burden off your shoulders is by automating your finances.
So what should you automate? Let's begin with the pay from your job. Contributing to an employer-matched 401k is the first no-brainer for an automatic deduction. Then have money taken from your check for things like flexible spending accounts, health savings accounts, and the like. From there you can send the rest of your check to your bank where it can be dispersed as you like (I have funds that go from my bank to Vanguard each month where they are automatically invested there.)
You can also save yourself a boatload of time (and potentially money -- you will never pay late fees) by automating payments of your monthly bills -- anything that's a recurring cost.
You can also fund any number of accounts automatically. You can build up your emergency fund, save for your next car, or put money away for your kid's college costs.
So try to automate as much of your finances as you can. It will make saving, investing, and managing your money much, much easier. And after a while, you won’t even notice that the money is not in your paycheck and is quietly growing your wealth through no further work on your part. How sweet is that?
Just don’t be lazy. Don't "set it and forget it." You will still need to occasionally check/manage your accounts to make sure there are no unauthorized charges or other errors.
Step 29: Develop Long-Term Goals and Plans
Now that your finances are solid, you can develop long-term goals and plans.
This isn't to say that you didn't have goals back when you started this process because you certainly did. But those were likely more along the lines of "get my finances in order" sort of goals. Now that your finances are in order, you're looking at a whole new world of possibilities.
So what do you want to accomplish? Don’t be afraid to dream big. Do you want to retire at 50? Do you want to buy that "special" car you've wanted since you were 13? Do you want to create your own non-profit to help disadvantaged youth in your area? Do you want to do some special things with your family (like take a cruise)? Do you want to completely fund college for your kids?
Whatever you'd like to do, write down your plans. Trust me, you’re much more likely to accomplish goals when you write them down instead of just thinking about them. Once you have them written down, be sure to review them regularly to make sure you keep a focus on your priorities.
Step 30: Establish Regular Tracking and Review of Both Your Net Worth and Spending
Way back in Step 1 we discussed computing your net worth. Now that your finances have improved, you should calculate your net worth at least every year. (Personally, I compute it monthly, but I'm a bit anal about money management.)
Because it's a measure of your progress. You can see how healthy your finances are (or aren't) and make adjustments accordingly. Hopefully you can watch your financial situation improve every year -- which will likely motivate you to make them even better.
In addition, review your spending plan once a month. Take the time to reconcile how much you have spent to make sure you are on track and not overspending. Over time you will develop a feel for your spending plan and will know if you are over, and you can review your plan less frequently (I moved from monthly to quarterly to semi-annually to annually to whenever I see something on Quicken that I want to check into.) Whatever time period and method works for you, be sure to keep a handle on how your money is spent. Otherwise you risk letting valuable savings/investments simply slither out of your hands without any notice at all.
There you have it. Thirty steps to improve your finances.
If you haven’t yet started your journey to better finances, what are you waiting for?
Have you had success with following these steps? I would love to hear your feedback!